Saturday, May 29, 2010

The War Against Finance

Whilst everyone is understandably worried about Europe'an PIIGS debt, it's also timely to examine what is happening with America's federal government debt, the grand-daddy of them all.

In a word, it's horrible.  The debt-to-revenue ratio for the federal government is the highest since right after WWII, soaring to 396% in 2009 and  projected to rise further to 424% this year (see chart below).


What is most worrisome is how fast debt rose, literally exploding from 2005 when it stood at $4.7 trillion and 205% of revenue, to nearly $10 trillion in 2010.  Such debt dynamics beg for explanations.

Apart from "keynesian" deficit spending, the most glaring dynamic at play is converting debt of the failed financial sector into public debt, i.e. massive bailouts.  In 2009 alone, financial sector debt dropped by $1.75 trillion while federal debt increased by $1.44 trillion (see chart below).

Data: FRB

Drawing an analogy with WWII, we the people of the United States went to war against Finance, lost and are now obliged to go deeply into debt in order to pay reparations. 

There are a number of logical, if problematic, extensions that can be drawn from this analogy:
  • Why are we still bailing out Finance?  The financial domino theory may be valid, but only during a crisis lasting a few days or weeks, at most. Too big to fail?  Fine, but does this still apply to the likes of Morgan or Goldman?
  • Why are we not demanding our money back?  It is insane to provide hundreds of billions to an industry that operates as a set of communicating vessels, taking "bailout" money from the multitudes on one end and giving it out as bonuses to the very few at the other.  That's Robin Hood in reverse, with the government's blessing! At the very least, top marginal corporate and payroll tax rates for the entire finance industry should rise to war-time levels (90%).
  • Why are we still allowing Finance to shoot rockets at us, i.e. to engage in gross speculation for their own account - with our money?
  • What is the sense of bailing out financial institutions instead of people?  Why go into more debt to the tune of trillions (the people's trillions, mind) and - at the same time - have families thrown out of their homes?
  • Weren't all of us supposed to win in this "war"?  Wasn't Finance supposed to be a servant of the Real Economy, instead of its task-master?  Because it increasingly looks like Finance is building a bunch of huge forced-labor concentration camps to ring the economy.  And guess who the inmates are...?

53 comments:

Anonymous said...

This is the all time most brilliant post I have ever read. It's so simple, and yet it raises the pertinent question, about the people.

We, the people, have lost the War against Finance. And the people have become the enemy.

Your statement is almost like the treatise of Thomas Paine: Common Sense. Consider making your treatise a manuscript. It is worthy of being the beginning of a manual of how to "Restore Economic Justice in America."

Debra said...

You know, Hell, what I like about Keynes is that he was probably the only GREAT "psychologist" the economic sect ever produced (thus far, and I don't see anybody rushing to follow in his footsteps).
While lots of people get all excited about his theories, I don't think they have a leg to stand on in criticizing the psychological premises that they are based on.
I could say that we are not taking the necessary steps because we... BELIEVE (and ONLY believe) in money as the measure (that's right, with numbers...) of ALL things.
Maybe saying that would be giving us too much credit at this point.
Because I think that "we" are functioning on NEGATIVE belief.
We can't really manage to believe EVEN in money any more.
But... we are seriously lacking the imagination to CREATE something else to believe in.
I said a long time ago here, I think..
The idolatry of money leads to... its destruction as a means of EXCHANGE, not a means of translating "absolute" and total value into something that can be "measured". You can't have a LIVING economy and a measurement of ABSOLUTE value at the same time. Not possible.
Doesn't it... intrigue you guys how much the economic models... EVACUATE the fallible, unpredictable human aspects of the economy ?
We haven't really begun to ask ourselves (in good psychoanalytic fashion...) WHY we are so obstinate about evacuating human fallibility in our world...What it means..

Debra said...

I agree with the first commenter.
I think that you have pared away all the frills, and that you are looking at the GENERAL picture, in a way that few people are capable of doing these days.
Excellent post, in my opinion.

Debra said...

On the psychological aspects of this problem...
Never underestimate the SYMBOLIC and IMAGINARY effects of trotting out that "failure" word.
In a current society which is incapable of giving ANY value to failure, which values "knowing" more than... "learning", and where perfection is worshipped, the F word is unacceptable.
Remember the.. Lord's Prayer ??
It says... "forgive us our debts, as we forgive our debtors".
Yep, you read me right.
Forgiving debt is... pardoning.
Try trotting out THAT word in OUR society, and see what kind of reaction you get.
In human society, it ALL hangs together, you guys...

OkieLawyer said...

One thing that you didn't mention is that the policy has been to cut off unemployment and COBRA subsidy benefits (COBRA is health insurance, for you Europeans out there). Unemployed workers, who now receive less than 40% of their previous pay (in the most generous states), will now also have to pay more than twice their previous health insurance costs. What this means is that many of them (perhaps most) will lose their health insurance. When they eventually get back to work, you can bet most of them will have higher insurance premiums. Millions of them are now in their 50s and are starting to have health issues. The requirement that insurance companies take people with "pre-existing conditions" doesn't start until 2013 for adults.

The fact that we did not follow the Keynesian model of raising taxes (the Republican party mantra is that taxes should always be lowered, regardless of the circumstances) during overheated and strongly expanding ("booming") markets in order to pay down the debt incurred during recessions / depressions put us in this debt crisis. We had an opportunity to free up much needed capital during the past decade, but the Republicans -- because they believed in the "Starve the Beast political ideology -- chose not to do that. This situation that we find ourselves in was, in fact, the plan all along. Bankrupt the federal government so that social programs, such as Social Security (i.e. pension supplements, for you Europeans out there), Medicare (national health insurance for those 65 and older), Medicaid (health insurance for the poor), unemployment and other social programs would have to be abolished in order to remain solvent.

What you are seeing now is just the conservative's plan being put into effect.

Unlike Europe, Americans do not have guaranteed health care. This will be devastating to Americans who will lose their health care -- or, at least, will have to "fly naked" and hope that they don't get sick or injured.

Here in Oklahoma, our Senators talk about how unemployment benefits makes people not want to work (even though, in Oklahoma, the benefits equal less than 30% of one's prior working pay). Of course, the Democrats -- who are supposed to be the party of the working class -- aren't much better; they are talking in the same general tone. "It's the worker's fault for being unemployed."

Debra said...

Okie, as someone who is used to seeing the most irrational behavior possible in human beings AND societies, consider this :
in the course of my quixotic work (Don Quixote meaning...) against the death penalty (for everyone, by the way) I remember what happened in 1992 as the Republican Congress in power peremptorily voted out any kind of educational program for prison inmates.
One Republican senator ? House member ? baldly stated that he couldn't JUSTIFY spending federal money for education for inmates when his.. out of prison "FREE ?" constituency could not afford education for themselves or their children.
You must admit that there is a kind of.. admirable logic involved here that I understand.
If there is NO DIFFERENCE between being in prison and out, where are we going ? (Of course there IS a difference, but when you're reasoning in purely monetary terms, that difference will not appear.)
My work against the death penalty taught me that our society is in "rage to punish" mode.
Rage, and feelings of helplessness have the unpleasant effect of ensuring that the social body inevitably singles out and picks on what IT identifies as its weakest members.
OUR social body, that is. (I refuse to concede that this is a UNIVERSAL phenomenon.)
With OUR uncooperative, every man for himself ideas/beliefs propping it up.
By the way... I keep telling y'all NOT to idealize the European social safety net.
It's amazing just HOW FAST a society can undo something once it's decided that it's hell bent on doing it.
And OUR leaders are very determined these days to bring US down to YOUR level, you know..
I could laugh about the frenetic gesticulations of our politicians, intent on jumping on board the Titanic as it sinks... if it didn't make me so angry, as you know.
What I call the steam roller of totalitarian globalization.
ALL of us.. SLAVES. No. Mindless drones.

Anonymous said...

The link below is from Michael Hudson, who presents one of the most coherent examinations of our relationship with finance I have seen.

"The Counter-Enlightenment, its Economic Program – and the Classical Alternative"

"The past half-century in particular has seen interest and other financial charges absorb a rising share of property rent, industrial profits, tax revenues and personal income.

"Financial dominance of real estate and industry, government spending and personal wealth seeking has been achieved largely by ideological conquest based on deception. For starters, financial interests seek a cloak of invisibility when it comes to their own gains and those of their major clients.

"Financial wealth – debt claims on society’s means of production and income – presents itself to society as tangible wealth itself, not as its antithesis on the debt side of the balance sheet. Banking takes on protective coloration to pose as part of the “real” economy, camouflaging itself as industrial capital and “wealth creation.”

"The Federal Reserve’s “land as residual” methodology for U.S. real estate statistics, for example, depict rising land prices as “capital” gains for buildings[1]. Debt pyramiding is depicted as generic “profit,” as if financial engineering were industrial engineering. And the symbiotic finance, insurance and real estate (FIRE) sector is reported as part of gross domestic product (GDP), not as extracting what actually are transfer payments from the rest of the economy.

"Alternatively, finance claims to be a necessary ancillary to the industrial economy. This was the rationale for the $13 trillion Bush-Obama bailout of Wall Street – as if the economy could not recover without making financial speculators whole. According to this trickle-down logic, labor needs its employers, who in turn need their bankers and bondholders. Likewise, renters need their landlords who need mortgage lenders. Populations need governments to run up debts to subsidize (but not regulate) the financial sector to extend credit (debt) to the economy."

http://michael-hudson.com/2010/05/neoliberalism-and-the-counter-enlightenment/

buckshotmoonshine said...

Whoa, whoa, whoa! You are confusing cause and effect by implying the federal government converted financial sector debt into public debt through bailouts.

Deleveraging by the financial sector and improved profitability is the reason for decreased financial sector debt. Most of the TARP (bailout) money has been repaid.

Revenue shortfalls due to tax cuts/credits and decreases in income along with unemployment insurance benefits extensions, increased defense spending and other automatic economic stabilizers are the reason for the increase in the public debt.

I highly recommend reading Paul Krugman's blog at the NY Times for a more accurate analysis of debt.

OkieLawyer said...

Debra, you brought up education. Well guess what? I was just about to post a new article when I read your comment.

A subject that we have tangentially discussed on this board before: student loan debt.

I want to get out and enjoy the beautiful spring weather this Memorial Day holiday weekend, so I will keep this brief.

The New York Times has a new article out about this looming debt crisis in student loans: Placing the Blame as Students Are Buried in Debt.

This is part of the Great Risk Shift, wherein we place more and more burdens onto the poor and middle class that they cannot handle. There once was a time where if you were qualified to get into school, you got in, regardless of your background, and it was part of the social compact. I think Europe still has this concept: public education.

Here in the United States, two upstart Austrian-school, Libertarian / Republican / Conservative politicians -- Ron and Rand Paul, to start, have called for the abolition of the Department of Education. "The free market will solve all problems" they say. (Google it if you don't believe me.)

I'm sorry, but this is very personal to me. I grew up in a low-income, predominantly African-American, crime-ridden area. People like me weren't supposed to become educated. In fact, I grew up in a fundamentalist Southern Baptist church (the one where the pastor stood in front of the Republican convention in 1980 and said "God doesn't hear the prayers of the Jews."). I was told by the elders of the church that I should not go to college because "it would make me an atheist." I was actively discouraged from getting an education.

This presents a real quandary for me because had the rules not changed allowing me to go to college, I likely would never have become a lawyer. I literally grew up "on the other side of the railroad tracks." I wasn't supposed to be anybody, no matter how smart I was or how hard I worked.

On the one hand, student loans allowed me to get into law school (my grades and LSAT entrance scores were marginal -- meaning that prior to debt funding, I probably would not have made the cut due to my impoverished background). On the other hand, all the education in the world doesn't change the "glass ceiling" of cultural biases against people like me and the difficulty of breaking through deeply entrenched wealth concentrations and social conventions.

In short, no matter how well I have learned to speak and write, no matter that I obeyed all "the rules" (obeyed the law, got an education, etc.), breaking through is damn near impossible.

I wrote about the "barriers to entry" in regard to student loan debt on my blog a long time ago. See: Advice to young Chiropractor: Just Make More Money

This article in the New York Times is just the latest manifestation of those barriers that we have been erecting for some time.

Debra said...

Okie... what I am going to say here is personal, but since you are expressing yourself publicly, I am going to authorize myself the possibility of responding to what you just wrote here.
You know that I hang out with what SOME people could consider to be the dregs of society (people on handicap allowances, the mentally ill, alcoholics, unemployed, etc.), AND I hang out with people who are educated, wealthy, Mercedes driving, law abiding, real estate owning professionals.
EVERYWHERE there are people who are warm, kind, sensitive, INTELLIGENT, gifted. (Although generally speaking the rich have a harder time showing it...)
For years in France I suffered with the impression that as a foreigner, I was not taken seriously.
France is a very... insular country. Like other mainly rural, agricultural countries, moreover. It doesn't integrate foreigners very well...
And.. I have NEVER been taken seriously here.
Like Jean-Jacques Rousseau whose books were burned, I arouse... antagonisms in people, which keeps me in a really marginal place..
But... the GOOD NEWS is that when you are in a marginal place, in spite of the really incredible disadvantages that it entails, there is also... a kind of personal FREEDOM that is available NOWHERE ELSE.
Of course... there is a price to pay for this kind of freedom, the kind that I'm... ADDICTED TO.
It's... marginality.
Having people not take you seriously.
Which means that.. you gotta learn to take YOURSELF seriously (but not too much..) and cultivate chutzpah.
Not trample all over people, but..assert yourself.
Build your OWN personality.
Be YOUR OWN person, to use that trite expression.
And it... "pays", to use a word I try to avoid.
Try it. What have you got to lose, anyway ?
Ann Landers is finished for the day. ;-)

Raymond said...

The graph shows clearly that after WW2, it is because the top marginal tax rate was 90% that the debt/GDP ratio diminished. It probably wasn't the only factor but it was an important one. And you can be sure that it is again required to get out of this mess.
Get the money where it is.
The 1st thing we can't afford is a parasitic class hoarding all the wealth.

Debra said...

Thought y'all would like to know that I demonstrated on Thursday.
I stopped going to the marches for a while out of discouragement, and unrecognized, unassumed apathy, but I'm back demonstrating again.
I heard that there was a big march in Lisbon today too. Against the austerity measures...
Who knows ? LET'S BE OPTIMISTIC !!
Maybe if WE ALL GET OUT INTO THE STREETS we can stop these fucking stupid austerity measures. (Sorry, Lord Blagger, but we don't agree on this one...)
When are we going to stop... enslaving ourselves to what WE'RE supposed to control, anyway ??
I KNOW FOR A FACT that the powers that be are afraid of demonstrations.
The powers that be are afraid of anything and everything they can't.. predict or control...
Like Lisbon's Carnation Revolution. I think that that was pretty unpredictable, as I vaguely remember...

Brian Woods said...

Debra: Heroic, successful failures are all the rage. Sentiment always trumps reason.

For a different view, try out our Irish economist Richard Cantillon (1725 ish). Very smart cookie!

Brian P

Debra said...

Brian... there is a universal mistake present in your comment there...
That we only function in... either/or mode.
As it turns out... I believe that the social body functions in either/or mode, moving from one extreme to the opposite.
But... as INDIVIDUAL PERSONS we are not condemned to function in either/or mode. We are not condemned to identify ourselves with the social body in a somewhat... mindless fashion.
The word... "and" DOES exist. It was in the dictionary the last time I checked.
Reason AND emotion.
Let's try sticking them together for a change.

Tiago said...

Okie,
Re: European safety net.

There is this myth in the US that Europe has a nice safety net. There is a pairwise myth in Europe that the US has no social safety net. Just suggest to some Europeans that the US has unemployment benefits, food stamps, medicare and medicaid and some will simply not believe.

In my country, because of austerity measures and deficit they are cutting heavily on unemployment benefit (other than introducing capital gains tax, nothing is going in the direction of the well off. Mind you, we do not have inheritance tax). Measures passed include cutting the maximum value of the benefit, also the maximum duration and increasing the time required to work in order to get the benefit and so on.

Now, some interesting details:

1. The party in power calls itself "socialist"

2. The minister for work suggested that this was not really cuts, because they were not abolishing unemployment benefits.

3. The minister was a former member of the European confederation of UNIONS. She was vice-president.

That somebody can even talk of abolishing unemployment benefits completely with a straight face, coming from a union and calling herself socialist (and implicitly suggesting that, in this economic climate, if you are unemployed it is because you are lazy)...

Do not mystify the European welfare net, it is clearly under attack. Health care seems for now the only thing that is only barely touched.

Edwardo said...

Deb wrote:

(Keynes) he was probably the only GREAT "psychologist" the economic sect ever produced.

I disagree... strongly.

Marx, who was, among other things, a pioneering economist, (see, or better yet, read) Capital, had a tremendous understanding of the human psyche. Whatever one may think of his theory, one simply can't write something with the power of The Communist Manifesto, offer brilliant insights about the nature of capitalism such as "All that is solid melts into air", and not understand, at a deep level, what makes people tick.

Thai said...

Hell, Krugman says "no" (or at least not yet)

... Further, all we have to do is cooperate. ;-)

PS- Do you know Thanos? He was mentioned in The Big Short as a Greek investor who correctly called the CDS collapse so I figured you might know each other since I'm sure your world is pretty small. Just curious.


Thanks Tiago ;-)

PS- except for Germany, most of you are closer to bankruptcy than America. The fact that your health care seems relatively safe right now from spending cuts doesn't actually mean all that much.

Weather changes

Hellasious said...

Do you mean Jim Chanos of Kynikos Associates? I know of him, but have never met him. Very smart man.

He was born in Milwaukee, by the way..

Thai said...

Hell, not sure if you remember my comments/questions concerning the fact that once upon a time we did have a line item veto?

Anyway, it appears my friend was correct after all and we really did have one and it really was eliminated by a Republican (Ford).

Anyway, so now we know

Debra said...

Well, well, well...
Do ya think that Krugman has been sneaking a peek at what WE'RE writing here on this blog, to produce a piece like that ?
The confidence word holds true... NOT JUST for debt, but... for fiat money, too, while we're at it. For the WHOLE economy.
Logical.
Ya know, I repeat myself A LOT on this blog, but as a good Mama knows (lol), you want somebody (your kid, for example...) to learn something, you gotta keep pounding away at it. Most of the time it will NOT go in the first time. Not at all...
The problem with the confidence word is that...
in order for confidence in fiat money/the capacity of the government to shoulder debt to be maintained, there HAS TO BE CONFIDENCE elsewhere in your society. Organized belief systems.
And.. here is where I'm going to differ with Krugman.
Confidence in your "elites" is NOT ENOUGH to keep a society running. Not in a.. DEMOCRACY, in any case.. Now maybe... confidence in your elites is fine (but I doubt it...) for a.. MONARCHY, or a totalitarian system. Na, the confidence DEMOCRACY needs (and the economy too, while we're at it...) is the CONFIDENCE/FAITH of EACH AND EVERY ONE OF US. And harping on about the elites is a rather convenient psychological mechanism that allow us to get off the hook for our INDIVIDUAL RESPONSIBILITY in the whole schmiel.
We don't.. BELIEVE that we have any power in the system as it is now ? We.. BELIEVE that the "elites" are running the show ? Well, then... we will BEHAVE as though we are NOT in a democracy, my friends, and we will thus... be individually contributing to the fact ? possibility that we are not living in a democracy...We will be contributing AT OUR OWN LEVEL towards putting totalitarianism in place.
Think about it... is this what YOU want, as an individual ?
Over there on naked capitalism some guy was telling me about "believing in the real estate market".
Bad plan, BELIEVING in the real estate market, (in the sense of having FAITH, I mean, which is closer to Krugman's word.. confidence).
It is... JUST NOT ENOUGH to enable you to get out of bed every morning.
And the bad deal about it, is that you have to keep moving from one bubble to the next to... maintain the semblance of... faith in your life.
Our western belief systems are looking a little tattered these days. Scientific materialism, our latest major belief system (which i don't like, ya know...) no longer musters a consensus in our society, and its adepts are diminishing, as it is being increasingly challenged.
Money ALONE won't do the trick.
Work, either, as I say.
Profit, na.
We need to look elsewhere from the classical economic sphere for our faith and confidence.
Gotta stick the cart BEHIND the horse, at this point, and not in front.
Thanks for your well merited correction, Edwardo. You are absolutely right about Marx.
Forgot him. Mea culpa...

Debra said...

Edwardo, on second thought, I am going to take back what I said about Marx.
I am not really competent to talk about Marx's writings on any other basis than hearsay.
So... on the basis of what WE think about Marx these days, and his reputation, it sounds as though Marx has a profoundly pessimistic vision of man. (And a GOOD shrink can not afford to have a pessimistic vision of man. If he does, he will not have the.. faith to work WELL with his patients, and why bother ?)
For me, man is an animal with his head in the stars, and his feet in the ground (like a tree...).
He is capable of the finest, noblest, most altruistic actions, as he is capable of the basest, most cowardly, and vilest ones.
But... it is certainly NOT by telling ourselves that he is ONLY capable of acting out of personal interest, and in rapports de force, or that he is completely determined by forces totally out of his control, that he will be able to have faith that he can behave otherwise, vois-tu ??
One of my favorite books about the economy was written by a woman in the 19th century, Elizabeth Gaskell, and is called "North and South".
It is a book about LIFE, with flesh and blood people, who are NOT IDEAS, or stick figures.
Nobody is a caricature. You might check it out.
And.. there is a great love story in there too.
Great... fiction, for a change.

Thai said...

Deb, the vision is nice we all share it, etc...

People still need to agree to a common set of rules.

Thai said...

Hell, my bad. I really wasn't trying to be... racist/nationalistic?

All those seems Greek names/words sound the same to me. ;-)

Anonymous said...

Martin Wolf discussed this with Carmen Reinhardt and wonders if this would lead to 'financial repression' as she says on historical grounds. That is, when gouvernments find it too expensive to borrow they force their bonds on institutions, cap interest rates and impose exchange controls.
Wolf asks for ideas.

http://blogs.ft.com/martin-wolf-exchange/2010/05/24/how-likely-is-financial-repression/

Reinhardt's book 'This time is different' is worth a place on the recommendation ladder.

Betty

Tiago said...

Thai,

It is not clear to me that Germany is all that good: their debt/GDP ratio is not fantastic (read, worse than Spain) and they are heavily reliant on exports. Who are they going to export to? Their European market is in the process of imploding. Will China and emergents hold? Remember that in the 1920s the US was the exporter... I guess we will find out. Anyway, if you think their model is good, there are other countries who are even better (Scandinavia and The Netherlands): high exports and really low debts (40% and such).

Regarding health care: It has some strong political backing (nobody will dare to suggest big cuts), and it is... economically efficient. Good value for money (compared with non-socialized alternatives). I do not dare to suggest that, in this chaotic climate, it is safe. But it is the safest thing I can think off are the EU. Even here (UK), the conservatives got into power by promising to protect the NHS and ring-fencing it against cuts.

A final note: health care in Europe varies a lot, centralized, command-and-control health care is in fact _not_ the norm. But the costs are socialized, one way or the other (see e.g. insurance models in Germany or NL).

Hellasious said...

Jim Chanos IS second or third generation Greek-American. Kynikos means cynic, aptly enough for a famed short-seller.

Debra said...

Quoting from my dear William, in "The Merchant of Venice" :
"Portia : If to do were as easy as to know what were good to do, chapels had been churches, and poor men's cottages princes' palaces. It is a good divine that follows his own instructions ; I can easier teach twenty what were good to be done than to be one of the twenty to follow mine own teaching. The brain may devise laws for the blood but a hot temper leaps o'er a cold decree ; such a hare is madness the youth to skip o'er the meshes of good counsel the cripple."

OkieLawyer said...

Daily Kos: Greek Contagion Spreading to Spain

Edwardo said...

Deb, I don't think Marx had a particularly pessimistic view of man-gimlet eyed, yes, pessimistic, no-if for no other reason than he envisioned a world where the downtrodden would one day cease to be so. The truth about Marx is that he was, in essence, a combination of Moses, who was, of course, the deliverer of the ancient Hebrews from Egyptian bondage and Jesus Christ, the deliverer, at least in the minds of his followers, of all mankind.

The injunction that Marx may be most famous for, "From each according to his needs, to each according to his abilities" is, in fact, a biblical injunction straight from Acts in The New Testament. Idealists are never pessimists, unless, of course, they give up their ideals, which by the way, Marx never did.

On a more personal level, with respect to Marx's outlook on humanity, he was, whatever his failings, a very loving father. No, I don't think Karl Marx was a pessimist. Now, Groucho, that's another matter.

Anonymous said...

Hell:

".....Why are we still bailing out Finance? Why are we not demanding our money back? Why are we still allowing Finance to shoot rockets at us? What is the sense of bailing out financial institutions instead of people? Weren't all of us supposed to win in this "war"?....."

This reminds me of one day during a lull in the market, I stepped away from my desk and went outside to burn one. I lit up and noticed one of our young associates, an Asian female, standing by one of the columns crying, tears streaming out of her eyes.

I walked up to her with a serious demeanor and inquired... "What's the matter Julie.... What's wrong...?"

She looked at me struggling to get the words out.... "They......they (management)... sigh... lied to me again...."

I smiled at her and I told her.... "That's not the problem Julie.... The problem is that you believed them again..."

Why in the tarnation do we keep believing that those in power are going to do the right thing...?

They never have and they never will...

Best regards,

Econolicious

Thai said...

"They never have and they never will..."

It seems someone else has gone off the fractal deep end as well. ;-)

Tiago, only Nixon could go to China.

You have people putting resources into the system, you have people taking resources out. The system as a whole only grows if those who put them in actually put more in and/or those who take them out take less (hence Hell's energy focus).

Further we live in a non-linear world in every imaginable way. As one simple illustration, hit the "collapse comments" link at the top of this page to see for yourself. It will come as no surprise that a few of us comment more often than others. ;-)

Most voters tend to think linearly, but your socialists understand the world is non-linear quite well. ;-)

We will see which party "goes to China" but if history is any guide, the collective can be a very harsh mistress.

Anne said...

As some one who has gone through several melancolic episodes, I think that I can.. "objectively" (lol !!!) testify that... the price of not believing is way higher than the price of believing.
Which is why I maintain that the person we so cynically label as "the sucker" is in better mental health than we (collectively) are.
And I distinctly remember a Keynes quote saying that sometimes it is better to be wrong with the majority than right alone.
THIS is what he was referring to, in my opinion. Believing.
Which puts me, as always, in the uncomfortable position of pointing out our... collective cynicism these days. Cynicism as an "organized" belief system... Worshipping... "NOTHING" in order to avoid being pegged as a sucker...in the eyes of others, but more important still, in one's own eyes.
Thanks for setting me straight, Edwardo. Marx, yet another one who knew his Bible, of course. Logical...
Um... just noticed that this comment appears under Anne... it is from Debra, of course.

Anonymous said...

"......Worshipping... "NOTHING"....."

Nothing is worth worshiping....! Preference is measured, worship is disproportionate.

I personally prefer apples to oranges, oranges to pears and pears to apples....

Go figure....

Ciao,

Econolicious

Debra said...

Nuance, Econolicious. I said worshipping NOTHING.
Not the same as... not worshipping anything.
Not the same at all...
I'm sure that your subtle, witty self will appreciate the difference, if you think about it...

Debra said...

So, against the backdrop of the struggling euro, news has come of the Israeli army's commando attack against a Turkish boat on a humanitarian mission to bring supplies and aid to the Palestinians in Gaza...
(a provocation, by the way, but one which did not justify, in my opinion, a massive deployment of military force...)
Just to keep things in perspective a little bit.
Money is just ONE symbolic system which is infeodated to LANGUAGE, the grandaddy of all our symbolic systems, the one where our.. IDEAS find their place...
This is a major bit of news, my friends. That has gleaned a headline in the Washington Post. A few years ago... YOU, over there would have heard NOTHING about an incident like this.
Barack should be ALMOST as worried about THIS news (and the international reaction to it...) as he is about that oil well.
Its..capacity for explosion and/or putting the heat on is.. almost infinite...
Too bad we give so much ideological priority to BRUTE, MILITARY force these days (vs diplomacy).
This is rather... STUPID of us. Sheer denial of what people here like to call reality...
Incidents like this do not happen in an ideological vacuum. Not at all. And of course, they take their place ALONGSIDE the financial situation, which is another facet of human "reality".
I predict... (lol) that the last thing that Barack needs right now is to... isolate the U.S. in a folie à deux sécuritaire relationship with Israel, WHEN that means... widening the estrangement with the rest of the international scene. France is finding it harder and harder to placate its immigrant populations whose "Arab" identity (by identification) is tied up in the Palestinian drama.
Barack can little afford to ignore this drama... IF he wants the EU to close its eyes on his strong arm tactics with Iran.
The EU may ape American attitudes towards money and finances, but NOT politics...
Particularly not in the Middle East. Solidarity with Israel is wearing ever thinner in Europe.
Israeli diplomatic relations with Turkey ?
Dead and buried ?
Come to think of it, the U.S.'s diplomatic relations with Turkey are not so great any more, either, are they ? (I plead ignorance on this subject which I have not followed closely recently.)

OkieLawyer said...

@Debra:

I don't guess you read the German magazine's account recently that showed that Israel had intercepted a German boat with munitions from Iran to Palestine.

I saw it from a link over at Calculated Risk yesterday, but I didn't keep the link. I would look it up, but if you knew how many comments they have over there....

Also, the Israeli Defense Force (IDF) put a video on YouTube purportedly showing that the "peace demonstrators" weren't so peaceful once the Israeli commandos got on the ship.

So, while the commandos may have used too much force, it's not like they didn't have reason to be on edge.

Obama Bailout said...

This is indeed a very nice post. This leaves us a food for thought. Money is always and will be the problem. We can't win this thing and it's a sad thing.

Debra said...

Okie... the Israeli Defense Force's video ??
You ARE a trusting soul, aren't you ??
Who are we gonna believe on this one ?
The damage is already done, regardless of what "really" happened, now, isn't it ?

OkieLawyer said...

@Debra:

Think of this phrase: "Who ya gonna believe: me, or your lying eyes?"

The IDF has video evidence of what happened on a part of the ship. It seems clear that some of the people on that ship had hostile intentions and actions toward the Israeli soldiers.

Another thing to think about, if said intention is to introduce contraband into Gaza (i.e. weapons), you can bet that there would be attempts to "probe" Israeli defenses.

Another thing to consider: if you suspect someone is a Mossad agent (or sympathizer), maybe you "leak" that there will be some weapons on such and such ship to see if it is interdicted. Such interdiction can then be used as confirmation of suspicion of spying by an agent of asset.

I would suggest that you are far more trusting than me. I have been reading about this for quite a while (provocative shipping maneuvers).

Also consider this explanation.

Tiago said...

One death is a tragedy, 1 million is statistic -- so the guy said...

Numbers?

OkieLawyer said...

Debra:

Here is a close-up shot of the "peace activists" attacking the Israeli soldiers.

Hellasious said...

The Israeli-Palestinian conflict has been going on for thousands of years and I suspect it will continue for ever.

It's a fractal conflict (smile).

Tiago said...

Okie,

I personally do not have an opinion about that conflict. Conflicts like that are ridden with disinformation, propaganda. Just to navigate the flow of information would be very time consuming. Much simpler issues like peak oil are already complicated and I prefer to spend time analysing things that might have a direct impact on me (self-centred, I accept).

That being said, the video that you posted is probably the most informative piece I've ever seen. And really had an influence in my own opinion.

Imagine that someone invades your home (illegal invasion). The only "weapon of mass destruction" that you have is "chairs and poles". You initiate self defence with those very dangerous "weapons". They kill you in response, not even a warning shot (so it seems).

Unless you are totally biased to the Israeli side, that video is the biggest piece of propaganda THAT BENEFITS THE PALESTINIAN SIDE.

In democracies (and even in dictatorships) we see much worse things being done and police does not start a shoot to kill.

The extremes of opinion are obviously not going to change, but for people in the middle that video is informative, alright.

Debra said...

Okie, in the minds of many people in the world, the Israeli government and the U.S. government are intimately linked.
The repressive, security obsessed Israeli government implements many of the policies that people in the world (rightly or wrongly...) see going on in the U.S.
The average citizen in France has access to eyewitness accounts about human rights violations, and atrocities committed by the Israeli army.
It is becoming easier to hear about these violations in the U.S. mainstream press, too.
The more people hear about these human rights violations, the more... impatient it makes them towards the Israeli government (too bad that U.S. citizens seem NOT TOO IMPATIENT with the human rights violations going on all over the U.S. too, in prisons, for example...).
And this impatience creates a climate where an incident like this one REGARDLESS OF WHAT HAPPENED, is a powder keg.
You think I am naive about this ?
But if you asked EVERYONE present on that ship what happened, OR IN THE ARMY... you would get a different version from everybody, now, wouldn't you ?
The credibility of film or eyewitness accounts in a case like this ?? You did criminal law for a while, didn't you, Okie ??
One of the major problems with video is that it creates the illusion that we are going to be able to bypass interpretation..
Bad plan. We will/can NEVER bypass interpretation.

OkieLawyer said...

Tiago:

Contrast "peace activists" with the violence shown, and I don't see how that is "pro-Palestinian." True "peace activists" don't use any violence.

Secondly, why would there be any need of any violence at all? We don't allow civilians here in the US to use violence against the police even where the search is illegal. Your remedy is to sue for violation of your civil rights in a court of law.

Thirdly, did Israel confiscate anything other than the weapons? My understanding is "no" and, in fact, five of the six ships had inspections without incident. So it wasn't like they were taking food and medical supplies away.

I had thought about commenting how much European opinion and news is biased against Israel. I realize that news and opinion is more pro-Israel in the US, but it seems to me that Israel took great pains to document what took place far more than Al-Jazeera.

Tiago said...

If you get your property invaded and are a peace activist, you should stand completely still? Even if you are mildly violent (see Greece), putting a bullet in the head? I do not know if they are peace activists, activists or drug smugglers, but the images that you linked clearly note a complete disproportion of reaction. Let me be honest here: This was the only piece of information that I've seen, start to end, about this. And I find staggering that people can put forward this as defending IDF behaviour, this only shows the measure of disconnect and partisanship.

I think you are clearly showing your bias in your comment about European opinion. I very much doubt you are based your opinion in anything other than prejudice, if you allow me the frankness. Why? How many European languages do you understand? How many different European periodicals do you read frequently? European opinion is plural with regards to that issue. You find staunch Israel supporters, staunch Palestinian supporters and so on. I avoid reading both sides most of the time: the thing is so emotionally loaded that one ends up just capturing bad vibes. But I notice that both opinions are there and are strident. I suppose you say that it is biased just because it does not reflect only your viewpoint (interestingly I find the exact same argument from the other side).

I leave a link to the opinion of the former editor of the most respected Portuguese newspaper: Hardly Pro-Palestinian. (no need to get translated, the image says it all)

Question, very honest (I really do not know). What did they find inside?

Anyway, nevermind. Trying to discuss wrt this issue is impossible (not just with people from your side, but also from the other side). Just a waste of time that shows how people can get so partisan and short-sided that it is not to be surprised that violence and death are a typical outcome of human behaviour.

fajensen said...

Well, If the Swedes launched home-made rockets at Copenhagen, 90% of the Danes would want the official measured response to be a division-sized artillery stonk!!

Tiago said...

fajensen,

And if the Swedes threw chairs and sticks (because the Danes invaded)?

I know that in _other situations_ rockets are thrown, therefore other measured responses might be appropriate. But we are discussing this specific video (I am not interested -- nor prepared -- to discuss the large picture)...

Regarding this issue (and climate change), I always tried to maintain some distance. Not having an emotional attachment to a theme allows to more easily study human biases towards issues.

Regarding climate change, I actually do have a strong opinion about a single issue: prediction models. A negative opinion. The kind of reactions that I have from people that believe in Antrop Warming when I simple state my opinion are amazing: they immediately think that, because I disagree with a small part of their argument that I am the devil. The ironic part here, is while I am AGW-agnostic, my lifestyle and political options are very compatible with the AGW crowd (I do not drive, for instance).

The larger point here is that, in extreme emotional issues it is very easy for people to come in support and justification of the worse kinds of atrocities. In fact, in these emotional issues, it is very common for BOTH sides to support atrocious acts.

Debra said...

To me, the big question is... WHY do we immediately polarize on this issue, and what can be done ABOUT THE POLARIZATION ?
This is what leads me to say to people HERE that belief is the name of the game, and that EVEN when you say you don't.. believe, well.. SOMEWHERE the belief question is still active.
And the more you want to fight against it... the more it goes off into ANOTHER, more distant universe where it will continue to make itself felt UNBEKNOWNST TO YOU.
But... I'm not normal the way the Keynes guy says...

Tiago said...

What can be done about the polarization? Big question, important. Do you have any answer yourself?

Of course we are all biased in regards to everything. We should recognize it and live with it. If we don't recognize that we are manipulated from our own internal myths, the more power they have.

Finally: when I say that I try to avoid bias by involving myself in some issues (middle-east or climate change), I know that it only goes so far. I try to be as ignorant as possible of issues just in order to study something that, for me, is more important: human cognitive bias in the presence of so much emotion and polarization.

Despair, I tell you.

Debra said...

Something that can be done about it (not belief... but the polarization issue...) is to look at language.
I never use that "manipulation" word, for instance.
I think that the only way to avoid polarization is to THINK. Which means being on the lookout for one's own prejudice.
With time, I've learned to... observe my prejudice, and recognize it when it crops up.
And when it crops up, I can analyze it, a lot of the time. (not all the time)
For the words... I try NOT to use words that transmit an ideological point of view that... I don't believe in. And when I use them, I deconstruct them, telling people WHY I don't use them.
I do a fair amount of etymological check too, to see where our words come from.
And... I'm very interested in cultural history.
And, as you can see here, I transmit what I'm learning to others all the time. I.. circulate words, and ideas in a different manner. (or at least I try...)
I really don't like the idea that abounds that we are "manipulated" all the time.
Because... if we think, we can largely escape the effects of any "manipulation".
One example... people tell us that if we're hungry when we go to the supermarket, we buy more.
But... if you KNOW that you're hungry, and that you MIGHT be tempted to buy more, if you're conscious of it then.. you're not "manipulated", are you ?
You're... FREE to buy, or not.
Free.. AND responsible by the way.
That's why I vote for intricating reason AND emotion all the time. Not the either/or paradigm.
The more you think, and are willing to think (which is to QUESTION your assumptions, and other people's assumptions, too), the less you have to fear.. "manipulation".
Good news, huh ?
Outside of that, the M question raises the age old problem of free will, and it is rather unfortunate that our society has assigned philosophy zero value, because... we need historical guidelines to deal with the question of free will, which is a.. UNIVERSAL one, by the way...

Tiago said...

Debra,

I supposed you've read "Language in Thought and Action"?

I do not know if I buy your idea of thinking. I know quite a few people that think in ways to extend their own viewpoint. And try only to convince others. Thinking as a way to fight off disagreement with their stated position.

Thinking is good, but not enough.

Regarding prejudice, I've written a couple of somewhat contrarian views on the subject. Warning: I write as well as you ;)

The idea of human limitations being unresolvable is something that become part of my world view.

Debra said...

I never said that thinking would solve all our problems...
Actually... I try to practice the golden rule, and follow the Gospel's indications.
That's my... belief system, if you like.
Pretty concise. I'll check your links.
You can see where I'm writing, if you like.
I don't read English books on linguistics.
I did my degree in French.